You provide some good info. for folks in this situation. If I could add, a couple more suggestions–homeowners facing possible foreclosure are probably unable to sell their house at a price to cover the mortgage (given price declines or due to expenses associated with the sale). Homeowners might consider attempting a short sale (a sale for less than the mortgage approved by the lender). This probably will be most likely with an investor-buyer who is willing to go through the bank approval process (not the crappy scammer types that you identify).

Another option is considering leasing their home to stop or lessen the burden of their existing mortgage payment while finding lower cost housing in the intermediate.

Either way, some help from an experienced real estate professional would be pretty critical.